Tax hike is posing as a spending cut

STATE DEFICITReducing Medicaid funds will cost us all

LAN BENTSEN

Published 6:30 am, Friday, March 11, 2011

The Texas Legislature has proposed a budget for the next biennium reflecting a multibillion dollar reduction in services from their current levels. Officials insist no new taxes will be considered, but they myopically fail to see that a proposed $7 billion cut in state expenditures to Medicaid actually triggers more than a $20 billion tax burden on all of us.

First, Texas will lose $10 billion in federal matching funds.

These are federal taxes that Texans have already paid to the national government, which are then redirected back to states as part of Medicaid and Medicare funding. Without the $7 billion state match, our $10 billion share of federal tax dollars is sent to other states — it is not reimbursed or saved.

If the proposed cuts are enacted, Texas taxpayers will be out $10 billion of our hard-earned money.

But, wait, it gets worse.

There is another $10 billion, at minimum, of new spending at the local level required to replace what is cut at the state level.

This is called cost-shifting. When an individual does not receive mandated services at the state level, then local jurisdictions are required by law to pick up the tab and provide those services - usually in a crisis situation at the emergency room, where costs are exponentially higher. That $10 billion consists of direct hospital costs reflected in local taxes and increased private sector health insurance premiums for all of us.

To "save" $7 billion at the state level, Texas taxpayers must forfeit $10 billion of their own federal taxes rerouted to other states, and incur an additional $10 billion in new cost burdens at the local level. That is a 3:1 loss for Texas taxpayers - certainly not a fiscally responsible option.